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Dairy Crest shares advance as first-half sales rise on growth in cheese and spreads

Published: 09:13 07 Nov 2018 GMT

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Dairy Crest is expanding its Cathedral City cheese brand

Dairy Crest Group plc (LON:DCG) maintained its full-year estimates after a strong performance of its Cathedral City cheese and Clover spreads brands led to higher revenue in the first half.

Revenue rose 2% in the £224.9mln in the six months to September 30 as 7% growth in Cathedral City and a 9% increase in Clover offset a 4% decline in Country Life butter and a 22% drop in Frylight cooking oil. The company said an unusually hot summer in the UK resulted in less consumption of cooking oil while high input costs continued to impact butter sales. Adjusted profit before tax gained 13% to £22.7mln as finance costs declined.

READ: Dairy Crest sees first-half revenue, profit ahead of last year, driven by Cathedral City, Clover performances

Net debt was cut by £60mln to £221mln at the end of the period, using some of the proceeds of a £68mln share placing in May.

The share placing was carried out to help fund the £85mln expansion of its cheese operations.  The company is increasing the capacity of its Davidstow creamery to 7,000 tonnes of cheese per year from 54,000 tonnes per year to grow Cathedral City in the UK and the US.

The group also recently launched new products in all of its categories, including a lactose-free cheese range. 

The company had a pension surplus of £126.9mln at the end of September, compared to £39.9mln last year.

Dairy Crest raised its interim dividend by 2% to 6.4p each as cash generation jumped 71% to £18.5mln. 

Shares rose 1.8% to 456p in morning trading. 

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